Drumbeat: December 15, 2009

The mass-introduction of the plug-in hybrid electric car is still a few decades away, according to new analysis by the National Research Council.

The study, released on Monday, also found that the next generation of plug-in hybrids could require hundreds of billions of dollars in government subsidies to take off.

Even then, plug-in hybrids would not have a significant impact on the nation’s oil consumption or carbon emissions before 2030. Savings in oil imports would also be modest, according to the report, which was financed with the help of the Energy Department.

One of the most frequently ignored energy issues is the time required to bring forth a major new fuel to the world's energy supply. Until the mid-19th century, burning wood powered the world. Then coal gradually surpassed wood into the first part of the 20th century. Oil was discovered in the 1860s, but it was a century before it surpassed coal as our largest energy fuel.

Trillions of dollars are now invested in the world's infrastructure to mine, process and deliver coal, oil and natural gas. As distinguished professor Vaclav Smil of the University of Manitoba recently put it, "It is delusional to think that the United States can install in a decade wind and solar generating capacity equivalent to that of thermal power plants that took nearly 60 years to construct."

Texas has three times the name plate wind capacity of any other state — 8,000-plus megawatts. The Electric Reliability Council of Texas manages the Texas electric grids. ERCOT reports that its unpredictable wind farms actually supply just a little more than 700 MW during summer power demand, and provide just 1 percent of Texas' power needs of about 72,000 MW.

I have warned in my presentation Coal World that unless we start using oil to build Alternative Energy infrastructure, the world will continue on its pathway of energy impoverishment (as the cost of all energy inputs continues to rise) and we will soon enough reach a point where transition to Alternative Energy infrastructure becomes prohibitive. The result would be a world turning back to the cheapest energy it can find–and that is coal. If economies and political bodies seems either reluctant or clueless now about using oil to build out new power generation, then 150.00 dollar oil will not function as the inducement that many presume.

Because transportation consumes a major amount of oil, bringing EVs into the picture in a big way is seen as a solution, with the added benefit of eliminating tailpipe emissions and at least stabilizing global warming (although the burning of coal for energy also has to go away). Obviously, however, an EV running off an electric motor with a battery that can weigh 600 lbs. raises the health-hazard issue: Does the electromagnetic field generated by the car pose a threat to drivers and passengers?

The Senseable City Laboratory at M.I.T. has designed a wheel that captures the kinetic energy released when a rider brakes and saves it for when the rider needs a boost. While technically sound, the wheel’s true challenge may be in winning over cyclists. For centuries, bikes have been beloved for their simplicity, not their bells and whistles.

But, said Carlo Ratti, the laboratory’s director, “biking can become even more effective than what it was.” What the lab is working on, he said, is “Biking 2.0.”

The new wheel uses a kinetic energy recovery system, the same technology used by hybrid cars, like the Toyota Prius, to harvest otherwise wasted energy when a cyclist brakes or speeds down a hill. With that energy, it charges up a battery inside the wheel’s hub.

The confluence of increased availability of natural gas and changes in environmental policy will spur its use in the coming years, a gas association official predicted Monday in Medford.

Electricity generated from wind power is inconsistent and regulatory requirements limit future coal and hydropower, Dan Kirschner, executive director of the Northwest Gas Association told the Chamber of Medford/Jackson County Forum. As a result, he said, there will be greater use of natural gas-generated electricity.

Canadian energy authorities have done it again. They missed their last rosy projection of future oil sands production, so they issued a new one: they merely pushed the big surge in production 5 years into the future.

MOSCOW (Reuters) - The head of Russia's natural gas giant Gazprom (GAZP.MM) said on Tuesday he did not expect a new gas war with Ukraine to erupt over the New Year, echoing an earlier statement from the Russian Energy Ministry.

MOSCOW (Reuters) - Oil production at Rosneft is expected to increase by 4-5 percent next year from expected 112 million tonnes this year, the head of Russia's largest crude producer told reporters on Tuesday.

Over the last decade, a handful of the nation’s small energy companies pulled off a coup. Right under the noses of the industry’s biggest players, they discovered huge amounts of natural gas in fields stretching from Texas to Pennsylvania.

One of these companies, XTO Energy, grew almost unnoticed into the nation’s second-largest gas producer, amassing a substantial portfolio of gas fields, and developing expertise in the complex technology needed to extract the gas from beds of a dark rock called shale.

Exxon Mobil Corp.'s acquisition of XTO Energy Inc. is the latest sign of a changing of the guard in the U.S. oil patch, as the small companies that led an exploration boom in the past decade start to give way to the international giants.

For years, Mexico's policymakers have avoided taking the tough medicine the country needs to boost its tax revenue and reduce its singular dependence on oil revenues. Congress had a chance recently to push through meaningful fiscal reform during a debate over the 2010 budget, but legislators balked at raising taxes in a year when the economy is set to shrink about 7.5%.

Now the country is paying the price: On Dec. 14, Standard & Poors became the second ratings agency in three weeks to downgrade Mexico's foreign-currency debt rating, reducing it from BBB+ to BBB. (Fitch Ratings downgraded Mexico on Nov. 23.) While Mexico maintained its investment-grade status with both agencies, the downgrades reflected concern that the country's failure to fix its tax system will hurt economic growth for years to come.

For most people, a trip to the gas pump rarely conjures images of oil spills, poverty-stricken communities and corrupt governments. The routine is so habit-forming that it’s rare we stop to think about how the fuel got here to fill our SUVs and Hummers.

But the crude world of oil exists despite our obliviousness, a world that New York Times Magazine writer Peter Maass shoves out into the open in his newest book, Crude World: The Violent Twilight of Oil (Alfred A. Knopf, $27).

HARARE (Xinhua) -- After enduring economic hardships for close to a decade, many Zimbabweans saw the year 2009 as the spring of hope and boding well for the future as the country's political leaders engaged each other to arrest the economic meltdown and ease political tension.

The year saw many basic commodities that had disappeared from shelves in retail shops become easily available, albeit at a cost, while health delivery services were resuscitated from the intensive care unit to provide a tonic to the country's poor. It was a year full of hope and promise.

New space observations reveal that since October 2003, the aquifers for California’s primary agricultural region – the Central Valley – and its major mountain water source – the Sierra Nevada – have lost nearly enough water combined to fill Lake Mead, America’s largest reservoir. The findings, based on satellite data, reflect California’s extended drought and increased pumping of groundwater for human uses such as irrigation.

Futures exchanges in the United States and London hope their new sour oil contracts will take off as Saudi Arabia starts pricing sales in the U.S. against sour crude after 15 years of linkage to the sweet type.

Nearly two-thirds of global oil supplies now are heavy sour, a high-sulfur crude that contrasts with the sweet, high-grade, low-sulfur type. The heavier or more sour the oil, the more expensive it is to refine.

NEW YORK/DUBAI (Reuters) - Kuwait, the world's No. 4 oil exporter, will switch the basis on which it prices oil cargoes bound for the United States to the Argus Sour Crude Index (ASCI), following a similar move by top world exporter Saudi Arabia, sources familiar with the plans told Reuters on Monday.

Kuwait will soon start pricing its U.S. exports against ASCI, a basket of sour crudes produced in the U.S. Gulf of Mexico, the sources said. They did not specify whether the switch would take effect immediately, but said state-run oil company Kuwait Petroleum Corporation sent a letter to U.S. buyers, informing them of the switch.

The world has passed Peak Oil and the gabfest at Copenhagen has objectives which, if realized, will seriously undermine economic activity. If the world is to reduce CO2 emissions then the world’s reliance on fossil fuels will have to reduce. There is no room for discussion on this point. But, if there is insufficient momentum for clean energy technologies to fill the void thus created then world economic activity must contract.

COLLEGE PARK, Md. – Improving the energy efficiency of Maryland homes heated by natural gas would generate a "hat trick" of economic and environmental benefits over the next 10 years, including more than 80,000 new jobs, savings of hundreds of dollars in average heating bills and a nine percent reduction in residential carbon emissions, concludes a new study by the University of Maryland Center for Integrative Environmental Research (CIER).

In the researchers' analysis, homeowners – with assistance from state government – would be encouraged to replace worn-out gas furnaces and water heaters with energy-efficient models, which are generally more expensive. Also, there would be incentives to improve household insulation. While these upgrades would cost thousands of dollars, they would more than pay for themselves in savings. Nearly half of Maryland homes are heated with natural gas.

CLIMATE talks have been going on in Copenhagen for a week now, and it appears to be a two-sided debate between alarmists and skeptics. But there are actually four different views of global warming. A taxonomy of the four:

To end this political stalemate, Dr. McKitrick proposes calling each side’s bluff. He suggests imposing financial penalties on carbon emissions that would be set according to the temperature in the earth’s atmosphere. The penalties could start off small enough to be politically palatable to skeptical voters.

If the skeptics are right and the earth isn’t warming, then the penalties for burning carbon would stay small or maybe even disappear. But if the climate modelers and the Intergovernmental Panel on Climate Change are correct about the atmosphere heating up, then the penalties would quickly, and automatically, rise.

The northern coastline of Alaska midway between Point Barrow and Prudhoe Bay is eroding by up to one-third the length of a football field annually because of a "triple whammy" of declining sea ice, warming seawater and increased wave activity, according to new study led by the University of Colorado at Boulder.

The conditions have led to the steady retreat of 30 to 45 feet a year of the 12-foot-high bluffs -- frozen blocks of silt and peat containing 50 to 80 percent ice -- which are toppled into the Beaufort Sea during the summer months by a combination of large waves pounding the shoreline and warm seawater melting the base of the bluffs, said CU-Boulder Associate Professor Robert Anderson, a co-author on the study. Once the blocks have fallen, the coastal seawater melts them in a matter of days, sweeping the silty material out to sea.

It turns out that cheese may do as much harm to the environment as some kinds of meat. Based on figures from Sweden, making a 1.5-ounce serving of cheese might be expected to produce about 16 ounces of carbon dioxide equivalent. Depending on which study you consult, a two- to three-ounce serving of cooked, boneless chicken should yield between 4.3 and 31 ounces of CO2 equivalent. (You'd get about the same number of calories from each.)

Hayles is among a number of intellectuals who see this dependence as not necessarily bad, but as advancing civilization and, above all, just inevitable. "From Thoreau on, we have had this dream we can withdraw from our technologies and live closer to the natural world, and yet that's not the cultural trajectory that we have followed," says Hayles, a professor of literature at Duke University. "You could say when humans started to walk upright, we lost touch with the natural world. We lost an olfactory sense of the world, but obviously bipedalism paid big dividends."

In the Computer Age, "we are making our environments more responsive to humans' needs and desires than ever before."

Approximately 50 percent of respondents predicted global peak oil supply to occur either between ten and twenty years from now, or beyond twenty years. The other 50 percent indicated that it had already occurred, or would occur within the next ten years. Chakrabarti commented that this data would serve as a principal "hot topic" for industry debates and forums in 2010.

"The issue of global peak oil has powerful economic and industry implications," he said. "As seismic technology continues to evolve, it will play an increasing role in assessing reservoir conditions and oil supply. Thus, we will continue a lead role in conducting surveys and monitoring market conditions to provide technological assessments as this issue manifests over the next few years."

Oil prices hovered below $70 a barrel on Tuesday, held down by high inventories and weak demand while investors awaited new data about the U.S. economy.

By early afternoon in Europe, benchmark crude for January delivery was up 10 cents at $69.61 in electronic trading on the New York Mercantile Exchange. On Monday, the contract fell 36 cents to settle at $69.51.

Prices have dropped over the previous nine days — the longest slide since 2001 — on investor doubts about a recovery in U.S. crude demand and as the dollar strengthened.

(Bloomberg) -- The Organization of Petroleum Exporting Countries raised the estimate for the amount of crude its members will have to pump next year as world consumption recovers.

OPEC, which produces about 40 percent of the world’s oil, predicts members will need to produce 28.61 million barrels a day to satisfy demand in 2010. That’s about 100,000 barrels a day more than last month’s projection and represents an increase in 30,000 barrels a day from 2009, the first annual rise in three years.

“Following two years of sharp declines, world oil demand is expected to return to growth in 2010,” OPEC’s Vienna-based secretariat said in a monthly report e-mailed today. “Fundamentals will continue to be weak in the first half of the year before improving in the second half.”

WASHINGTON (Reuters) – U.S. producer prices rose more than expected in November, lifted by a surge in energy costs, and recorded the first year-on-year gain since last November, according to a government report on Tuesday.

The Labor Department said the seasonally adjusted index for prices paid at the farm and factory gate jumped 1.8 percent, the largest gain in three months, following a 0.3 percent rise in October.

(Bloomberg) -- Crude oil prices will probably continue to decline even after a short-term rise, according to technical analysis by Newedge Group.

West Texas Intermediate oil futures for February delivery are in “an underlying downtrend” that wouldn’t be affected by a small, short-term rise in prices, Veronique Lashinski, a senior research analyst at Newedge USA LLC, said in a note to clients yesterday.

GENEVA--The world's airlines are set to lose $5.6 billion next year, far more than previously estimated, with a rebound in passenger and air cargo demand only partly compensating for rising fuel costs, industry group IATA said.

In its latest outlook, the International Air Transport Association on Tuesday reaffirmed its projection for an $11 billion loss in 2009 -- a year its chief Giovanni Bisignani called "an Annus Horribilis" for the highly cyclical sector.

But do you honestly feel that oil prices will fall below $60 per barrel?

I just don't see how that would be possible, especially considering the supply threat that peak oil presents. And it's scary to think there are people out there who believe global oil production will reach over 115 million barrels per day by 2030.

Larry is the author of The Trust Effect and numerous published articles on leadership and organisational change. Here's a sample - The influencing skills of Barack Obama. His latest book, Climate Change and Peak Oil - Threat or Opportunity? will be published in 2010.

"If this scenario came to pass, what would be the opportunities for business?" Watch a video of Larry Reynolds hosting a debate on the issue.

(Bloomberg) -- Tropical Cyclone Laurence, Australia’s first storm of the season, is intensifying as it moves closer to the northwestern coast, triggering evacuations of offshore oil and gas rigs.

The storm, now off Western Australia’s Kimberley region, was upgraded to a category three on a scale of one to five and at 8 a.m. local time today was 85 kilometers (53 miles) north of the town of Kalumburu, moving southwest at 8 kilometers an hour, the Bureau of Meteorology said on its Web site.

(Bloomberg) -- OAO Gazprom “fully” resumed deliveries through the gas network in the southern Russian region of Ingushetia by 7:25 p.m. yesterday, after halting flows when an explosive device was found, the Moscow-based gas export monopoly said today in an e-mailed statement.

(Bloomberg) -- Total SA, Europe’s largest refiner, said a strike at its Feyzin plant in France is affecting two production units, as talks continue over pay.

The labor disruption is affecting exports of refined products from the site, Michael Crochet-Vourey, a spokesman for the Paris-based company, said today by telephone, without specifying lost output or the units concerned.

With one flick of a switch, Russia's long-standing dominance and near monopoly over Central Asian natural-gas exports officially came to an end on Monday.

The Turkmenistan-China pipeline, which will carry natural gas from eastern Turkmenistan through Uzbekistan and Kazakhstan into China's northwestern Xinjiang region, went on line on December 14 during an inauguration ceremony attended by regional leaders. It marks the first time in more than a decade that a pipeline has been constructed to pump gas out of the region, and is the biggest effort to date to export Central Asian gas without using Russian routes.

(Bloomberg) -- Lyondell Chemical Co. filed a plan to reorganize even as it evaluates an offer from Reliance Industries Ltd., pitting India’s biggest company against lenders in a battle for the bankrupt chemical maker.

Lyondell plans to reorganize by repaying its $8 billion bankruptcy loan in full and giving an equity stake in the new company to lenders, including sponsors of a $2.8 billion rights offering. The plan, outlined in U.S. Bankruptcy Court in Manhattan, “won’t preclude Reliance from making a bid if it chooses to do so,” said Lyondell spokesman David Harpole.

(Bloomberg) -- Exxon Mobil Corp.’s $30 billion purchase of XTO Energy Inc., the largest U.S. petroleum takeover since 2006, may signal a wave of acquisitions as major producers seek to tap growing gas and oil output from shale formations.

If XTO Energy's shareholders endorse the deal, Exxon's purchase of one of the nation's largest independent natural gas producers will give it access to gas shale fields in the Rocky Mountain, Great Plains, Texas and Appalachia regions. The move by Exxon, which is known for taking a conservative approach to mergers and acquisitions, could further reinforce industry claims that a 100-year supply of natural gas rests under the continental United States.

The purchase also places a significant bet that natural gas demand will increase if Congress and the Obama administration lock in a U.S. climate policy that puts a price on carbon dioxide emissions.

(Bloomberg) -- Palm oil futures may advance 19 percent by the end of the first quarter, said Dorab Mistry, director of Godrej International Ltd., one of India’s biggest importers of vegetable oils.

Palm oil may gain to 2,800 ringgit to 3,000 ringgit per metric ton ($820 to $879) by the end of March, said Mistry in remarks prepared for delivery at a conference in New Delhi. He was reiterating a Dec. 4 prediction that the commodity would increase to 3,000 ringgit by the end of March.

TOKYO - Toyota Motor Corp will begin selling "affordable" plug-in hybrid cars in 2011, upping the ante on General Motors and Nissan Motor as they aim to take the lead in the field of rechargeable cars.

Toyota's first plug-in model, the Prius Plug-In Hybrid (PHV), adds an external charging function and more batteries to the popular Prius to enable longer-distance driving on electricity alone.

Because it can also run on gasoline, plug-in hybrids -- such as GM's upcoming Volt due for sale next year -- eliminate the "range anxiety" seen as one of the main shortcomings of battery-powered pure electric cars.

(Bloomberg) -- General Electric Co. and Google Inc. said governments need to provide consumers with more information about how they are using power and how much it costs to help them consume and pollute less.

Armed with real time pricing and energy consumption data could result in consumers using 15 percent less power, the two companies said in a joint statement today at the United Nations Climate Change Conference in Copenhagen.

Fuel starts with a little Josh Tickell history, how he and his family used to enjoy the unsullied Australian environment only to move to the southern US States, his mother’s homeland, and be banned from swimming in the bayous, not being allowed to eat the fish, don’t drink the water and often not even breathe the air.

Not one for sitting still, Tickell set off across the US in his bio-diesel eco-van in an attempt to show that there was an alternative to fossil fuel oil. The van, kitted out with its own oil-cleaning system, was topped up along the way with used oil from fast food restaurants.

When I posted the trailer for In Transition—the documentary about the Transition Towns movement as a response to peak oil and climate change—commenter CB was less than enamored with the film making style. Maybe now CB can judge the entire movie, as the makers have just released the entire thing for viewing free on YouTube. Click below the fold for parts one and two.

The talk of impending peak oil and climate change might give fodder to those who talk about the dark side of transition towns, but the ultimate message is one of hope—namely that it's time to roll up your sleeves and get engaged with the challenges we face.

This was quite apparent at a meeting hosted by the African Development Bank on November 18 during which directors, chief executives and other senior staff from the Finance and Energy ministries, KPLC, KenGen, and Ethiopia Electric Power Company met to discuss energy development plans.

WASHINGTON — A solid majority of Americans support the idea of a global treaty that would require the United States to reduce significantly greenhouse gas emissions, a USA TODAY/Gallup Poll finds, although many also express concern about the potential impact on the economy.

The results provide some encouragement for President Obama, who attends the United Nations conference on climate change in Copenhagen on Friday. By 55%-38%, those surveyed endorse a binding accord to limit the gases tied to global warming.

(Bloomberg) -- Jeremy Brown, a fisherman from the Pacific Northwest, is pulling things from the ocean he says are so disturbing that he came to Washington to warn U.S. lawmakers about it.

“This is not overfishing, this is something far larger,” said Brown, one of 10 people who met with lawmakers and legislative aides this week on behalf of the Sustainable Fisheries Partnership, a San Francisco-based group that advises seafood producers on fishing practices.

(Bloomberg) -- Monsanto Co., the world’s largest seed producer and maker of genetically modified crops, won the so-called Angry Mermaid award handed out by The Friends of the Earth for undermining efforts to deal with climate change.

The Amsterdam-based group said Monsanto took 37 percent of the vote, followed by Royal Dutch Shell Plc at 18 percent and the American Petroleum Institute with 14 percent. A total of 9,800 people voted globally, the group said.

(Bloomberg) -- United Nations negotiators failed to agree on financial aid that industrialized nations such as the U.S. and Japan will give to the developing world for coping with climate change, threatening a global-warming accord.

With China and India seeking about $200 billion a year for developing states, envoys are bargaining over options for aid beginning after 2012, each without financial commitments, according to a draft agreement released today. The talks among 192 countries end Dec. 18, and developing nations say they’ll reject an accord to curb global warming that has no money.

WASHINGTON – Black soot deposited on Tibetan glaciers has contributed significantly to the retreat of the world's largest non-polar ice masses, according to new research by scientists from NASA and the Chinese Academy of Sciences. Soot absorbs incoming solar radiation and can speed glacial melting when deposited on snow in sufficient quantities.

Temperatures on the Tibetan Plateau -- sometimes called Earth's "third pole" -- have warmed by 0.3°C (0.5°F) per decade over the past 30 years, about twice the rate of observed global temperature increases. New field research and ongoing quantitative modeling suggests that soot's warming influence on Tibetan glaciers could rival that of greenhouse gases.

"Tibet's glaciers are retreating at an alarming rate," said James Hansen, coauthor of the study and director of NASA's Goddard Institute for Space Studies (GISS) in New York City. "Black soot is probably responsible for as much as half of the glacial melt, and greenhouse gases are responsible for the rest."

Andrew Adonis, the United Kingdom’s Secretary of State for Transport, announced yesterday that the government would invest £200 million in the increased electrification of the railway system, adding to a commitment made last summer and furthering the country’s investment in carbon-friendly transportation systems.

Here is one comment that particularly struck me;

With pressure from the rival Conservatives to develop a plan for high-speed rail, Labourites have pushed their own improvement programs focusing on electrification and the High-Speed 2 program, which would connect London and Scotland in just over two hours. A decision on the alignment of that line will be announced in the spring, just prior to elections. Labour is clearly attempting to use a renewed focus on rail improvements as an electoral point-booster. Whether the citizenry will be convinced is another matter, since Labour suffers from deep unpopularity as a result of its long stay in government, limited ability to improve public services, and involvement in the Iraq War.

Imagine that. Conservatives with their own plan for something productive. Ours seem to be of a Libertarian flavor, and oppose government doing much of anything. Except for war, I guess.

This comes in addition to the £1.1 billion worth of announcements made in July, which included the electrification of the corridor between Liverpool and Manchester and the installation of overhead catenary along the Great Western Main Line between London and Reading, Bristol, Cardiff, and Oxford.

ericy - the British government is famous for re-releasing, re-re-releasing and even re-re-re-releasing news favourable to their election hopes. Election fever is ramping up and they will be re-hashing any old news and also some non-news. These 'announcements' refer to works which have been planned for years as part of on-going maintenance and upgrades. There is no wow factor here, just spin.

The plain fact of the matter is that departmental budgets will be slashed after the election and transportation will be at the front of the queue.

And note it isn't any more rail routes for connectivity. It's just higher speed from London to Edinburgh for those paying big wonga. You did all notice that we in the UK now have at least one £1000 rail ticket??

Who owns the railroads, anyways? I found the article about the £1000 rail ticket, but it also talked about Thatcher's privatization of the railroads. But if they were privatized, where does the government come into the picture?

The tracks and signals and stations etc are nationalised into a company called National Rail which is 100% government owned (someone correct me if I am wrong, but I am sure it is 100%)

The rolling stock and routes are privately owned franchises leased from the government on fixed term basis. Except one of the northern routes has just been taken over by the government for doing so poorly.

The UK rail system is therefore quasi-nationalised. It is a bit of a mess but a heck of a lot better now than in recent years. I actually enjoy traveling by rail, and so long as one does not travel during peak hours it is not expensive. I can travel in comfort and warmth, with frequent services from here in Brighton to Southampton and return - total of about 140 miles - for just £10.95 at the weekends, £13 week days after 10am. It is quite a lot more before 10am. Doing this by car would be about £20 petrol, £4 other car costs and then about £15 for a day's parking - total of £39. So when I go to watch the football at the weekend it makes a lot more sense to take the train - also I can have a few pints too!

Not everything about Britain is crap. Most is, but at least we do have a functioning public transport system. The reason why people do bitch about it is that they are unused to planning their journey. They just expect to be able to go where ever, when ever. So long as you plan it is not bad. I do most of my 'commuting' by Skype and remote desktop support. If a client needs me to visit in person then I always schedule a meeting in the afternoon to allow me to leave after 10am to keep the train cost down.

One thing that the aticle doesn't really mention is that the key problem in the UK rail system is hitting train, and hence passenger, capacity limits. Because the railways and stations were primarily laid down during the nineteenth century, there are various choke points (bridges, points, limited platform lengths, etc) along with a reluctance to do what's needed to acquire land for laying new tracks and extending stations that would most effectively address this.

Whilst electrifying parts is a reasonable thing to do, it won't make a huge difference to small/mid-distance commuting traffic capacity, which is where the biggest potential for reducing passenger car miles is.

Unfortunately, the UK is looking at declines in all sources of indigenous energy production. Even nuclear is down from its peak. From the Energy Export Databrowser:

In an earlier post I already cautioned against planning on imported LNG saving the day. I think the UK has no choice but to embrace a massive conservation effort. Perhaps electrified rail will be part of that effort but only if there are cuts in electricity use somewhere else.

That's a pretty brutal graph right there. For a country like the UK with extremely limited exploitable domestic resources nuclear (and renewables for that matter) doesn't seem like such a bad idea. Much better to diversify, even if at a cost, than being reliant on LNG. Considering the volatility LNG saw last year (even more than oil), being reliant on LNG is insane.

This is why I see the US will be able to be more resilient than Europe in the face of peak oil. We do have significant coal and nat gas reserves, fantastic wind and solar resources, and ironically more room to save through efficiency (it'll be harder for Europe to make more net savings).

Coal plants are going to begin to shut down (it's already happening) in the face of low nat gas costs and carbon pricing. It may be worthwile to mothball these plants rather than dismantling them in the name of resiliency.

Yes, but does it represent supply or demand contraction? Given the financial meltdown/great recession demand is off significantly, so your chart probably makes the supply picture look worse than it really is.

No. Demand has held up. Domestic supply has cratered. There is no hiding this fact. The UK had a boom time with North Sea oil and gas - not just abundant domestic supply, but also the tax revenue as well from net exports. The US imported from us in the 80s and early 90s. Make no mistake, the UK is possibly the worst of the so called 'rich' nations for energy security. And barely one in a thousand of Her Majesty's loyal subjects even knows, let alone cares about it. We will be exporting more and more of our fiat pieces of paper with HM's head depicted to buy in more and more of our energy. Our trade current account will become wider and wider in the negative and the impact on sterling, coupled with monumental fiscal deficits, will ruin the economy. We are sleep walking into a nightmare.

The plot above only has to do with production. The Energy Export Databrowser has separate 'All Fuels' plots for production and consumption (look under the 'plot options' button). Here is the plot for UK consumption which hasn't gone down nearly as much:

The difference between production and consumption is made up by imports/exports. The demand destruction resulting from the recent economic crisis barely figures in the consumption chart as the BP dataset they are based on only goes through 2008. The 'Import/Export' plots in the databrowser will show you when the UK switched from net exporter to net importer status for each of coal, oil and natural gas. (Note: The BP dataset improperly assumes that nuclear derived electricity does not cross borders so the databrowser does not show this evolution for nuclear power. According to the world nuclear association the UK imports about 4% or 8TWh of its electricity from France.)

In my opinion, the charts make the supply picture look really scary ... just like it really is. The world won't end tomorrow in the UK but Brits will have some hard choices to make over the next decade.

well we could always close the steel and aluminium plants in places like Teeside and Anglesey. Not sure what the poor buggers who used to work there would do. Perhaps go to Brum and build cars and vans? Oh, hang on, no they all closed up shop as well. Well they could try the Nissan plant in Sunderland, that's still going strong - oops, nope, even they are on short hours... Errrm, how about ship building! .. They can go to Govan and get busy... What's that you say? There are no jobs there either? Mmmm. Ok, so forget the old smokey industries of yesteryear... We should look to the future and build out a green infrastructure! More wind turbines I say! Send the workers to Vestas on the Isle of Wight... Oh hang on, they closed down too...

Doesn't look good for jobs does it? I agree that cutting back on energy use is what our future holds, but are you sure that deindustrialising against a continued population expansion, lack of community integration, low educational attainment and fiscal incontinence is going to be all dandelions and clover?!!

Trying to rescue the British industrial economy at this point is like putting plastic wrap around the tomato cages in late October. Yes, you might keep them on the vine a few weeks longer but there won't be any useful new production for another batch of salsa. You're better off planting something hardy like kale and cozying up as best you can for the upcoming economic winter of thin stew.

I read your "earlier post" on the likely future demand for NG and LNG and I agree that it does not look promising AT ALL fro anyone bidding for NG supplies.

To expand, Saudi Arabia burns oil (at least in the summer) to make electricity and they have a shortage of domestic NG (a shortage that is likely to intensify post-Peak Oil). Eventually, they will buy NG from Qatar (the logic is clear) and the UAE will also import more NG.

Getting Iran to stop flaring so much offshore NG and develop their resources is the best medium term solution I can see. Then export their NG to India, Pakistan and the EU.

But this "solution" has political problems, and will not last forever.

Precisely! Come up with a financing scheme that rewards the banksters and one can get any green project implemented. Use some kind of complex bond and/or leaseback system for the capital and it will be easy to get the necessary political support for the project.

The figures below were taken from Appendix A Reference Case and are from two different tables. US C+C production, in quadrillion btu per day was taken from table A1 and total world (all liquids) production in million bp/d was taken from table A21. The EIA has about the same projections as the IEA out to 2030 but the EIA keeps everything growing out to the 2035, the limits of this report.

Do you think the EIA has ever talked to the geoscientists who were polled in the report linked to above? Kinda makes you wonder about the accuracy of their data. As a prime example, where are the error bars in their estimates?

I seriously doubt that the EIA talks to geoscientists outside the oil industry. They use mostly published reports from BP, the EIA and other industry insiders. Of course they talk to the USGS. The USGS does have one peak oiler geologists on its staff, Lester Magoon.

One of the comments that I made to one of the high-ups at EIA was that I use them for data, but their projections are ridiculous. I said that every year, we see oil production fall in the U.S., and then you always show the next year turning upward and continuing. Then production falls the next year, and you just move the line on the graph forward, and project that production will turn up the following year. The answer I got back? "Guilty as charged."

By the way, I just noticed that they have the transcript of the session up. Here is what I said about peak oil (or at least how it was transcribed; I just saw some transcription errors in earlier pieces):

Mr. Rapier: It’s obviously a very controversial subject. And often I see very frequently media stories dealing with peak oil as we’re actually not running out of oil. We’ve still got a trillion barrels in the ground. So the issue is not running out of oil. We will never be running out of oil. We will have oil for one hundred more years. It’s can we get it out of the ground fast enough to keep up with demand growth? And that’s where the problem is going to lie in my opinion and forward.

We may see an oil production peak in the next three to five years. There are a lot of very authoritative people who believe that that’s the case. There are some people that would believe that renewables are going to come in and fill that void. I’m not one of those people. I believe it will — there will be a contribution, but if we have a world oil production peak in the next three to five years we’ve got a serious problem. But, again, it’s not about running out of oil. And that’s the most common misconception I see about peak oil when people write about peak oil. They want to debunk that by showing how much oil is left in the ground, and that’s what we’re talking about, one trillion barrels of shale in Utah. The trillion barrels doesn’t help when it takes more than one trillion barrels worth of energy to get it out. So it’s useless. And that’s about the case. It takes a tremendous amount of energy to get that oil out. So we don’t have a trillion barrels of recoverable reserves, maybe a very small fraction of that because the energy balance on that is very marginal.

I made those comments to a packed room, on a panel flanked by the mainstream media (Washington Post, USA Today, and a former editor from Fortune). Think they will invite me back? :-)

One of the comments that I made to one of the high-ups at EIA was that I use them for data, but their projections are ridiculous. I said that every year, we see oil production fall in the U.S., and then you always show the next year turning upward and continuing. Then production falls the next year, and you just move the line on the graph forward, and project that production will turn up the following year. The answer I got back? "Guilty as charged."

As far as I can tell this is no longer a problem now reported US oil production is matching perfectly with projections. Now of course this makes using them as a data source problematic but ..

Think I've seen a snazzier version here. Even in 2007 they were calling for 90 mb/d in two years. That sure didn't pan out.

In my darker moments the notion that EIA data is suspect crosses my mind. What if that surge in KSA production in '08 was wholly fictitious, just more of that leverage the IEA whistleblowers were talking about being applied, and they were really just at the same plateau as before - or declining? We really have no way of knowing, and their disinclination to increase production when prices were on the up is very suspicious.

97.4 mb/d for 2010. Here's my spreadsheet. 2007 WEO called for 89.6 mb/d in 2009. Khebab Sam had a post about shifting forecasts, I seem to recall. He had one about their data revisions, I know that for sure.

It's -30C/-20F down here in Russia where I live (56N). I bought ice cream for all my colleagues this morning as a gift from Grandpa Frost (=Santa). The weather made me think about homeless. Life expectancy for homeless people in Russia is 5 seasons. During winter, they occupy heat transmission lines, basements of apartment buildings, self-made shacks near large landfills. In latter case they use old car batteries and old/improvised resistance heaters to survive nights. I heard each homeless person has to collect at least five car batteries before the winter or he's not going to make it. Life "off the Matrix" in Russia is more like slow death.

Homeless in the US don't live long either, and I think the life expectancy isn't much longer. In fact I half-jokingly say that I was given a death sentence when I lost my business, the punishment for my failure being that I'd not be employable or able to rent a room etc and be homeless, where violence, disease, exposure, etc would cause a life expectancy for me of about 5 years. Quicker than it takes most States in the US to get around to frying those given the death sentence, and far cheaper.

Basically, people either get off the streets again, or they die.

The US has far less of a social and especially medical safety net than even Russia, and the people are meaner. If you become homeless your friends all turn their backs to you because that's how they'll get to Heaven or something. So, you're on your own.

It's no wonder so many of our folk heroes and real-life historic figures with semi-hero status are those who have lost everything and started out from scratch and made it. A good example is Woody Guthrie, his book Seeds Of Man is a good one. He describes scampering around as a kid collecting junk (recyclables) and trying out a number of things, he tried doing art, and sold some paintings but found that if he came up with a song, that people liked, well, once he was done singing it "he had a job all over again" singing it again.

As for the homeless in Russia, self-made resistance heaters are sheer Russian genius! I think smallish wire, AWG #24 or @26 will do it, you make a pad or vest to go inside your shirt while you rest or sleep. It sounds like they have a problem with charging the batts though, it may be possible to come up with an induction coil that can couple to a power line and then you rectify and filter its output, to trickle charge the batter you're not using at the time.

I feel for them, it's the same life-arithmatic as here in the US, you either get off the street or you're gone in about 5 years.

I am off the street myself. There are not words strong enough to describe how lucky I am. I am lucky because I was not severely depressed (that may have happened in another season) nor a drug addict, an addictive drinker, sick, etc. And I have fairly decent social skills - top of the heap as homeless folks go. But one severe beating, then chronic pain or addiction acquired while healing to opiates, or the loss of my good eye (which I still worry about now) or any of a number of factors and I' be that mumbling, smelly, scary homeless person on your street.

Maybe there is something you can do to help them, even if it's just something small ....

But this fall, Virginia, under the leadership of Gov. Tim Kaine, became the first state to severely limit cul-de-sacs from future developments. New rules require that all new subdivisions attain a certain level of "connectivity," with ample through streets connecting them to other neighborhoods and nearby commercial areas.

And how will the people respond who actually have to live and drive in the new, cul-de-sac-free neighborhoods? "There are pros and cons," says Kaid Benfield, the director of the Smart Growth Program at the Natural Resources Defense Council. "Residents like walkability and they like not having to be forced onto an arterial road where the traffic jam is. On the other hand, there is a sentiment out there that cul-de-sacs are safe" — though Benfield says research actually shows fewer traffic fatalities occur on connected roads. Other states are watching the Virginia rules closely, and Benfield says he expects to see similar regulations adopted around the country in the next few years — which means the dead end may soon be a thing of the past.

One might argue that this horse is already out of the barn and halfway to town but I suppose it is better late than never.

I think this is silly. Residential cul-de-sacs don't generally dump onto arterials....they dump into neighborhood capillaries. Cul-de-sacs promote neighborhood unity (all the kids play in the cul-de-sac, where there are few stranger cars and no high speeds) while they shutter them in back yards on the feeder streets. I don't like having strangers driving 50mph down my 25mph street in front of my house, but they do. I'd gladly pay $20K more to have my house on the cul-de-sac behind me instead. Cul-de-sacs are for kids....feeder streets are for DINKS and retirees, IMHO.

I don't know what studies they're looking at, but I don't see how traffic fatalities COULD happen on a cul-de-sac, unless it's a child getting hit. As for walking/biking, you walk out of your cul-de-sac to the feeders and from there to arterials...quick and easy. Think fractally, like a head of brocolli -- lots of little balls on little branches, still getting to the stem shortly and simply.

Smaller yards, more shared areas...what's not to love? Now make some of those into duplexes or quads and it would be even better. Skates, bikes, basketball, football passing -- all things my kids have enjoyed in our previous cul-de-sac.

The problem with cul-de-sacs is that everyone has to get out onto overcrowded arterial roads to get out of the development. Yes, there may be neighborhood capillaries, but those only lead to the arterials. You end up with a situation where no matter which way you turn you are stuck in horrible traffic. In order to get to a grocery store that is 1 mile from home, you might have to drive 5 miles. Another side effect of this is that people are far less willing to walk anywhere since the distances are so much greater - instead they get in the car and drive.

I see this a lot when I try and ride my bike. These vast developments with cul-de-sacs which lead nowhere are kind of like a dead zone in the sense that they are effectively a dead end. To get anywhere you are forced to ride miles out of your way - oftentimes on crowded arterials.

Where I grew up there was a grid of streets, and you still have neighborhood unity. Any given street has very little traffic since it is spread out amongst so many other streets in the area.

I see your point, and I have seen mega-neighborhoods (including gated subdivisions) layed-out that way, but that's not the way the neighborhoods I've lived are like. They have curving roads, odd layouts, and cul-de-sacs layed within a larger grid, and I can readily get into the next neighborhoods from mine, and from those to the next, etc. Some even have dead-end stubs where they're intended to connect into a neighborhood that doesn't exist yet -- just open fields.

When riding bikes, my kids and I do exactly the hop-by-hop path. While driving, though, my first choice is to dump out on the main arterial and make my .8 mi as-the-crow-flies trip to the corner market into a 2-mile round-the-block drive. I do this simply because I don't want to watch out for and inconvenience peds, kids, and bikes, and to avoid the many speed bumps. Instead, I can safely and mindlessly drive 50mph while enduring a couple of lights.

If/when I have to bike or EV or golf card along the way, the bike-route will the way I go. Probably will add about 50% to the crow-flies path, but most of that is due to the grid effect on a diagonal rather than small-scale layout.

Some modest level of interconnect, even via bike/ped-only paths (which we also had in my Denver neighborhood) could provide the best of both worlds. I'm not worried much about a stranger on a bike, and would welcome them to cruise by anytime.

Best hopes for compromise, and clearly articulating values and issues.

Right, paleocon. Requiring an easement between two lots at the back end of the cul-de-sac for a pedestrian walkway to get to the collector road is a simple way to avoid the long detours and keep most of the privacy of the cul-de-sac.

On a related note, having the grid pattern and neighborhood layout feed traffic to the center, with an elementary school there, is a nice goal as well. Here the majority of fully-built-out, smaller-lot sections already have an elementary school in the middle. Already the nearby kids walk/bike, and with a bit of layout help the entire mile easily could, with very little traffic overlap (having grade-school kids cross a major feeder of rush-hour workers is not a good plan!).

Large-lot and incomplete sections bus/drive to the nearest school -- never more than 2 miles now for elementary. Middle schooler ride futher by bus, and most high-schoolers drive. In a lower-energy future the older kids should meet up at the elementary school and get a bus hop to their schools until city bus/streetcar connections come along.

Well, 6th grade is the very top of grade school for most schools here, and admittedly a shift back to such mechanisms and driver awareness is necessary too. While these do not exist today, I would agree there is no reason such a shift could not recur.

More worryingly, though, is that here we had a five year old dumped naked 2 miles from their yard a year or so ago. A pre-teen girl narrowly escaped after abduction by jumping out of a car a few months ago. We've had two drive-by murders of high-school kids at or near bus-stops. Vigilance may be more necessary today than in years gone by.

I'm actually one of the more trusting people, in that I'm happy letting my kids play in the front yard unattended, and to bike the neighborhood with a buddy or two. Many only allow their kids to play in their back-yards.

It'll be interesting to see how societal trust and trustworthiness evolve as things slow down.

I simply don't understand how it has come about that kids aren't taught how to cross the street any more, or whatever the problem is. Since I had to cross one busy street or another to walk to school from first grade on, I find it to be a big joke that people get sooooo upset when their high schoolers have to cross a busy street - it's the apocalypse, according to all the moaning. Except that the joke really isn't funny, and will be less so if it gets to where people can't drive as much. So have we in the USA just had an overwhelming attack of the stoopids, or what? Anybody?

In my experience, interconnectivity was rarely done over the past 20-30 years, either for cars or pedestrians. It usually has to be forced by the jurisdiction. I lived in a neighborhood in Mississippi surrounded by 4 arterials like a square, about a mile on each side. Only one road led in from the west and one from the east. The people on the eastern side got the city to put in a gate between the two sections because of traffic from the Catholic church on our side. No telling how many thousands they spent on that, and it was often vandalized. At first you had to get out of your car to push a button to open, then it was locked, last time I went home I think it was wide open all the time (broken).

Build them anywhere you want, that NYTimes piece linked here about PHEVs is pretty grim news for the greenwheeling set:

The report found that plug-in electric cars could number 40 million by 2030 — provided that rapid progress is made in battery technology and that the government provided hundreds of billions of dollars in subsidies and incentives. However, the study suggested that a “more realistic” scenario is closer to 13 million cars. That would represent 4 percent of the estimated 300 million cars that would be on the road by then.

The main reason behind this slow rollout relates to the cost of the batteries. Building a plug-in hybrid that can run for 40 miles on electricity costs $18,000 more than a similar conventional car, the report stated. While a mile driven on electricity costs less than one driven on gasoline, “it is likely to be several decades before lifetime fuel savings start to balance the higher first cost of the vehicles,” the report said.

An $18k premium is three times that for an NGV. These things are really looking to remain toys for the upper crust, those who want to show off their carbon footprint, that is.

Click on the link provided for the report, and look at the authors: the first author is the Committee on Assessment of Resource Needs for Fuel Cell and Hydrogen Technologies!

Why should we be surprised that they are pessimistic about electric vehicles, and recommend more research into fuel cells??

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It's easy to think that large organizations are monolithic. If we've seen good work from an organization, we assume it's other work will be reliable.

Unfortunately, large organizations are built up of many individuals and departments, with varying levels of competence and integrity, and different interests and biases. We have to review each new product with fresh eyes.

The industry “encourages high spending and indebtedness. It can create insatiable aspirations, fuelling feelings of dissatisfaction, inadequacy and stress. For a salary of between £50,000 and £12m top advertising executives destroy £11 of value for every pound in value they generate”.

GM only got serious about this about 3 years ago - it takes time to ramp things up.

That's one of the things that's least understood on TOD: there's an enormous difference between the short-term and the long-term. In the short-term, oil consumption is inelastic, and oil is essential. In the long-term there are a lot of alternatives.

Yeah, I hought it was unduly pessimistic. Assume the higher end of todays battery price etc. Probably assumed that gasoline was still $2 to $3 as well.
It will probably be five years before we get decent consumer availability of plugins. Looks like Toyota is starting about right, 14mile range is probably the weet spot with current battery technology. I ran the numbers, the hybrid-only mode came out as 72mpg, quite a big jump over the Prius-3's official 50mpg. But a big rollout, to high volume will robably take a long time. We still need some breakthroughs and expensive gas before they reach a serious fraction of sales (say >20%). Predicting beyond 10 years out is foolish, and he's making strong claims about 2030!

Basically, assume BAU. Without even looking at the report I can tell that Peak Oil is not on the author's radar. I guess we can read this report to be saying that, if things remain pretty much as they are now with oil supply growth(?), demand growth and prices the situation we foresee will be ......

Most of us here on this site do not believe things are going to remain as they are so, I think we can agree that this "forecast" is just about as useful as the IEA/EIA/CERA crude oil production forecasts. I'd love to see a similar analysis done by a Peak Oil aware group i.e. one that does not assume BAU.

Case in point:

The report found that plug-in electric cars could number 40 million by 2030 — provided that rapid progress is made in battery technology and that the government provided hundreds of billions of dollars in subsidies and incentives. However, the study suggested that a “more realistic” scenario is closer to 13 million cars. That would represent 4 percent of the estimated 300 million cars that would be on the road by then.

I suspect that there are not going to be "300 million cars that would be on the road by then". Peak Oil is going to mean a peak in a lot of things. Peak Automobiles anyone?

On the other hand while the best mpg US car buyers can hope to get for non hybrids is 33city/41highway, European buyers can choose from the 10 Diesel Cars With The Best Fuel Economy (MPG) ranging from 54 to 70 mpg (EU combined driving cycle) and that's just the top ten! A couple things about this list are that there are improvements like this for the 2010 model year and positions 2 and 9 are held by Fords. So, if the average US commuter could wrap their head around using a much smaller, much less powerful car for their commute, there is a lot that could happen in the US without needing to use hybrids or electric cars. An interesting look at that angle is taken in a Ferbruary 2007 article on MSNBC titled "U.S. ‘stuck in reverse’ on fuel economy"

The NRC report assumes $14K for the battery pack, and a $18K overall premium.

Again, we see that GM is paying $8K for such a battery pack right now. That includes $5,600 for the cells, and $2,400 for the pack electronics (charge & temp management & packaging).

GM is charging another $10K for the early-adopter premium, new R&D, and smale scale early production.

Consider the Prius: it has parallel ICE and electric drive trains, a battery pack with all of the electronics, etc, and it goes for $24K. In 5 years li-ion cells will go for $200/KWH, and another 15KWH will only add $3k.

Yes, I think a large price premium is likely. Please note, that's a price premium, not a cost premium. The NRC report was talking about cost, and they're wrong.

Don't forget, there's a $7,500 tax credit. If the Volt is priced at $37K, the net price will be $29.5K. On the one hand, that makes it about the same price as the average US new light vehicle (which averages about $28K). On the other, it's pretty clear that the Volt pricing is designed to capture the credit. IOW, the price would be lower without the credit.

This price is designed to capture the credit, as well as the premium that early-adopters are willing to pay. The first year's production won't be large, and GM will have a waiting list - it would be irresponsible for them to price it lower.

The price in later years will depend on demand - it could be like the Prius, the production of which doubled every two years, but still had a waiting list for it's first 7 years of production.

Nevertheless, the premium to produce it (in 5 years, after the R&D is amortized, and li-ion costs have progressed further in their normal cost decline) won't be nearly as large - maybe $6K. That will pay for itself in reduced fuel and maintenance costs, even at $3/gallon gasoline.

Now, he originally said the price target was $30K. Then Congress passed a $7,500 credit for the Volt (and yes, it was aimed at the Volt), and suddenly the price target became "close to $40K".

Ask yourself: why can GM set a target production date 3 years ago for November 2010, and still be on schedule to the day, and yet have it's price estimates be off by 30%? The obvious answer: the pricing environment has changed, not GM's costs.

Even at $48,000, GM will be taking a substantial loss with each sale of the Volt. In an interview with HybridCars.com on the morning of the Volt’s unveiling in Detroit, Lutz acknowledged that the company would have to subsidize the cost of the vehicle for “about as long as Toyota subsidized the price of the Prius” before it became profitable. That took Toyota about 10 years. If the Volt is a success, then GM could become a victim of its own success, suffering losses before the vehicle reaches economies of scale and starts turning a profit.

Edit:
I just reread your post. In it you say that Lutz says the cost is $40k. But he must be wrong. As is the NRC. As is everybody else who reported on this.

Thank god we have a semi-anonymous blogger out there to correct the biggest manufacturing company in the world, The National Academy of Sciences, and the entire journalism industry on their production costs.

Well, the article is wrong. Just goes to show you - sometimes popular articles and journalists get it wrong.

Lutz has said that their costs are about $40K, and a proper price would be $48K, where GM would make a traditional profit.

Let's be clear: GM has never said that it expects to price it at $48K. Instead, GM executives, including Lutz, have speculated that it might be priced close to $40K.

GM said at one point that it expected to lose money on the car. But, that was based on earlier, lower prices. They now say that they might break even, though they haven't set an official price.

I'll try to find you articles to support the above.

-------------------

But...you have to use your common sense. The Prius costs $24K, and it includes all of the components that the Volt has (in somewhat different configurations), except for a smaller battery. GM's supplier says that the Volt's battery pack costs $8K (and will drop in half in roughly 5 years). That adds up to $32K.

What else could add costs? Well, R&D of about $1B, for starters. If you spread that money over the first 100K vehicles, you add $10K per car. If you allocate it over the first 2M vehicles, you only add $500. Thus, manipulating amortization of R&D allows you to make your costs whatever you want them to be.

------------------

I just saw your edit.

In it you say that Lutz says the cost is $40k. But he must be wrong.

Ah, no, I don't think Lutz is wrong. I think he's deliberately exaggerating, because GM has decided to price the car higher. As I note above, costs can be manipulated awfully easily: just choose to recover R&D costs more quickly. Now...I could be wrong. It could be that GM has simply chosen to take a lower loss, and that they face very high startup costs. Could be. Doesn't change the picture once production ramps up.

As is the NRC.

Oh, they're wrong. Look at the evidence I provided, from GM's supplier.

As is everybody else who reported on this

No, some journalists have been more careful.I'll see if I can dig up some better articles.

So I guess Vice Chairman of Global Product Development for GM is lying. And you, Nick the blogger, are correct.

And since you, Nick the blogger, is the only person in the world correct about the Volt's cost then your criticism of the NRC study stands correct. That means HEVs will be a substantial part of the market. That means every thing will be electrified. And we are all saved from Peak Oil.

Ok, here's a source for $48K including profit:"Lutz now figures a more realistic price for the Volt would be about $48,000. He reckons that $40,000 might be possible, without making any profit. " http://www.msnbc.msn.com/id/23793222/page/2/

So I guess Vice Chairman of Global Product Development for GM is lying.

Not lying, just exaggerating a little. Don't forget - Lutz isn't an engineer. He often says things that are a little out of sync with the line executives, and the engineers in the program. Don't you remember what he said about climate change being a crock of ****? He just talks pretty loosely, that's all. Here's an example: "Lutz cited higher-than-expected battery prices for pushing the Volt’s price up by $10,000." http://www.leftlanenews.com/bob-lutz-saturn-vue-plug-in-chevrolet-volt-t... well, we know that's not correct - we have it directly from the supplier.

Lutz originally said they expected to sell the Volt for under $30,000, and at a loss. That might suggest a breakeven of perhaps $35K, and a theoretical list price of around $42K. Now Lutz is saying breakeven is around $40K, and list ought to be $48K (in a perfect automotive world, where an initial subsidy wasn't needed). Don't forget, they haven't said that they plan to actually charge $48K - that's only theoretical - they're still planning to sell at a loss (as did Toyota with the Prius, for it's first 5-6 years).

The line executives are giving different reasons: that the cost has increased because of the very short timeline for designing and sourcing parts (they're saying this premium should go away in a 2nd generation) http://www.canada.com/topics/news/story.html?id=e4b3ebaa-d5c4-48d0-8473-... , and because they're now leaning towards building in a bigger warranty cushion for the battery, just in case (this can also be expected to go away with time).

Now...does this matter? No. I'm speculating about the reasons for the price increase, because I wanted to address your concern about the initial pricing. But...it doesn't matter. This is a first generation car, and costs will go down with later generations.

On the other hand, if you want to rely on GM in that way, you can't be selective.

"GM-Volt.com has reported an original interview with GM advanced technology engineer Nick Zielinksi.

Zielinski was asked if the second generation Chevy Volt would have a price goal around $20,000 and stated "you’re pretty much describing our plans for Gen 2. Looking to improve efficiency, maintain performance, take cost out of the car and how can we broaden Voltec technology to other vehicles.""

You're right about PR, but as usual I think it's a little more complex: some people in GM see it as PR, and others are serious. GM is certainly much more serious about this than the EV-1 - there's no comparison - even the people who see it as PR concede that it's extremely important to GM's future.

I'd say that GM is, on the whole, firmly committed to the Volt. How quickly it grows depends on events - they could go the Toyota/Prius route and grow it slowly, or they could really push the pedal.

You're right about PR, but as usual I think it's a little more complex: some people in GM see it as PR, and others are serious. GM is certainly much more serious about this than the EV-1 - there's no comparison - even the people who see it as PR concede that it's extremely important to GM's future.

General Motors has cast doubt over the long-term future of the Chevrolet Volt by claiming it may not be commercially viable and other rivals may overtake it with superior and more advanced technology.

GM submitted a regulatory filing report to the US Treasury yesterday and CEO Fritz Henderson claimed its “disclosures are consistent with our commitment to remain transparent and to keep the public informed of our progress”.

I tend to agree, there are a range of opinions inside GM from what little I can tell.

And running a commercial program with two eyes on PR does not help the project succeed technically or financially. One strike, not three.

Yes, the Volt will make a difference, and time will tell just how big a difference. I suspect the biggest impact of the Volt will come from cars that do not have a GM badge on them (i.e. it will motivate other car companies).

Best Hopes for Electric Cars (but especially those that do not require refueling & batteries :-),

Yeah, if you've dedicated your life to ICE's, EV's are threatening - even if it's your company, and maybe expecially if it's your company.

d running a commercial program with two eyes on PR does not help the project succeed technically or financially

The need to maximze PR means that they're being very, very careful about quality. That's a good thing. Also, I think the staff closest to the program believe in it the most. I'm not worried about the technical side. On the finance side, GM's top management is throwing money at the program to make it succeed. The latest was an offer of $100M from the board to accelerate the program launch, which I believe was largely turned down as unhelpful for such a tightly scheduled thing.

the biggest impact of the Volt will come from cars that do not have a GM badge

Yes, that's very important. For instance, Toyota just announced a plug-in Prius, and it's pretty clear that the Volt is the reason.

There was a pervasive sense from the poll that the American dream had been upended for many. Nearly half of those polled said they felt in danger of falling out of their social class, with those out of work six months or more feeling especially vulnerable. Working-class respondents felt at risk in the greatest numbers.

...The poll also shed light on the formal and informal safety nets that the jobless have relied upon. More than half said they were receiving or had received unemployment benefits. But 61 percent of those receiving benefits said the amount was not enough to cover basic necessities.

Meanwhile, a fifth said they had received food from a nonprofit organization or religious institution. Among those with a working spouse, half said their spouse had taken on additional hours or another job to help make ends meet.

Even those who have stayed employed have not escaped the recession’s bite. According to a New York Times/CBS News nationwide poll conducted at the same time as the poll of unemployed adults, about 3 in 10 people said that in the past year, as a result of bad economic conditions, their pay had been cut.

Ahhh yes. The Murkhan Dream has ended. That which I left my duty staion in Oahu,Hawaii to come home with my discharge, marry my girlfriend and actually start to live my portion of that American Dream.

I had flown and fought the Cold War long enough. I packed my gear and laid my wings and flight suits away for good after five years of dangerous but exiciting life in Naval Aviation. Five aircraft lost and some of my squadron mates burned to death. My first aircraft burned on the apron during preflight. I had enough after 4,000 flight hours.

Frankly, I think a huge chunk of the American dream is in rebuilding FROM tatters. Civil War Reconstruction, Dust Bowl desperados, and that tattered flag that made it through the battle. My town was burned by the British, by the Abenaki and by our own fireworks on July 4, 1866.. rebuilding from devastation is simply part of the story. Terrifying AND Thrilling!

Right now, we're in Rumplestiltkin mode, having been asleep and untested for decades. Time to get woken up again!

People will have to try to get by. The only revolution under Roosevelt was a 90% top tax bracket and the social safety net, an incremental improvement over 19th century progressivism.
Obama is absolutely no radical and openly favors TPTB.

I find Airdale's takes on reality to be pretty palatable, most times.. but then I have a strong streak of the romantic as well. 'Forensic' is OK, but I don't like the color options, and it's usually too dry..

"A joke is like a frog. You can dissect either one to see how they work, but they will usually die in the process."

Romantic(ism) is a tricky term. It is usually applied to anyone speaking the least bit wistfully about any time in the past or any less resource intensive lifestyle than upper-middle class American lifestyle.

Any such romanticisms are left distantly in the dust by the dominant romanticism of the American Way of Over-consumption. Because it surrounds most of us and it is constantly beaten into our heads everywhere we look, we think of it as not romanticism but realism or the way it is or reality.

This is the way a hegemonic ideology works, of course--convince everyone that it is reality and not ideology, and dismiss every other perception as either mortally dangerous (socialism...) or utterly silly and unrealistic (romanticism...).

Roosevelt was among that part of the elite who understood that if they did share at least something with the people then the game was going to be up. To that end they co-opted the progressive party agenda and did just as much as they thought would mollify the populace, and (combined with the war) it worked and the people were mollified. Others in the elite never forgave him for that, not recognizing that they might not exist anymore if he hadn't succeeded.

We are approaching a "do over" on this scenario, but so far there is no populist uprising nor any sign that the elite understand the stakes, but then this time we face real resource limitations - and it is still way too early and not near widely painful enough. This time there may not be enough to share, and no one capable of denying themselves of anything.

Not so sure about the revolution, but agree with your take on the president. A year ago he was president elect, and he seemed so different.

Revolutions are just people trying to get by while the world changes beneath their feet. Only hindsight, and the rear view mirror, know for sure.

Our greatest upheaval, the Civil War, was actually a time of intense suffering for a few, while the majority waited for news of the outcome. Revolutions targets individuals, while society proceeds as usual awaitng the outcome.

I think it was Ken Burns who pointed out that during the Civil War, many people seemed more interested in the Harvard-Yale crew races than with what was going on on the battlefield. The more things change, the more they stay the same.

From the "Most back a treaty on GW" article: "By 55%-38%, those surveyed endorse a binding accord to limit the gases tied to global warming."

I'm guessing that those 38% include those who don't believe in evolution and those who don't think Obama is a US citizen and those who aren't sure whether the earth moves around the sun and the moon around the earth.

About a third of the country should be not allowed to vote or be included in polls because of extreme ignorance.

Unfortunatly dohboi I suspect that a very large portion of the 55% are folks who didn't understand that they would have to change their life styles to any real degree to meet a binding agreement. Add the number of folks who don't believe in GW to the folks who won't support any measure that causes them even a minimal amount of pain and, IMHO, you'll be looking at a huge majority which the politicians will not want to anger.

It's wonder to have such faith that human nature and self interest will not dominate future actions dealing with AGW. I'm am not a memeber of that faith. Here at TOD we bask in the glow of some very smart and compassionate folks. Too bad they don't represent our society.

Good point. Making major changes in ones lifestyle is not something most care to contemplate. A student of mine went to a talk by Bill McKibben, she said she was convinced by everything he said (which included pretty vivid statements about the nature and depth of the problem of GW) except his final point that air travel was not sustainable. The only reason was that she was planning a trip to Disneyland and didn't want to feel bad about it.

She later admitted in front of the class that she considers anything that is an inconvenience to her to be evil. I think mostly she was more honest than the students who were quieter about these things.

I'm a bit surprised and pleased that 20% of Republicans were willing to make changes, and disappointed but not very surprised that only 32% of Dems were. One would think that there would be a greater split given the virulence with which many Republican spokespeople deny GW and disparage anyone who call it a real and deep problem, and given that the most visible proponent of the position is a former Dem VP.

dohboi -- Being in Texas I don't have too large a liberal data base to draw from. More then a few of my Democrat friends readily admit that they harbor Republican appetites. Not as many of my conservative Texas cohorts are as anit-AGW as you might guess. But maybe that's because many are in the oil patch and it's easier for them to connect the dots.

But the one consideration that tends to unit Texas libs and cons is a clear dislike for anyone telling them how to live...especially the Feds. In my limited sphere I would expect a cold hard reaction from both sides of the political spectrum if anyone tries to force a significant change in lifestyle. Ask them what about the rest of the world: "that's their problem. They can deal with it or die...the choice is theirs." Like I said: cold and hard. And I suspect that position will be shared by many of our Yankees cousins.

So true ericy. We still have warehouses full of "Let them freeze in the dark" bumber stickers for our Yankee cousins just waiting for the next east coast blackout. You gotta appreciate a common attitude in Texas: The number of folks that hate you is almost as important as the number that like you. Hard to explain but I see it daily. Sort of like the old Indian folklore: a tribe greatness is measured by the strength of it enemies.

As a former (and hopefully future) New Mexican I found the states civil war history very amusing/enlightening. At first they were totally indifferent. Then they found out Texas joined the Confederacy and they immediately joined the union. Oops,soon Texas was rapidly conquering the state, but the Colorado militia came in and saved the day.

EOS -- An old joke but I'm sure you'll enjoy. Bumber sticker in Colorado: "If God had wanted Texans to ski He would have made B.S. white". Subsequent sticker in Texas: "God did want Texans to ski...He gave them oil."

The Irish government has unveiled one of the most severe budgets in the Republic's history. Finance Minister Brian Lenihan announced pay cuts for public sector workers, as part of efforts to achieve savings of 4bn euros ($5.9bn; £3.6bn). Taoiseach (Irish Prime Minister) Brian Cowen will have his pay reduced by 20%. "Those at the top will lead by example," Mr Lenihan said.

The Irish economy will shrink by 1.25% in 2010, he forecast. He had previously estimated a contraction of 1.5%. The economy is expected to shrink by 7.5% this year, confirming a previous reading.

"Our economy is still in a weakened condition, and our self confidence as a nation has been shaken," Mr Lenihan said. "The government's strategy over the last 18 months is working and we can now see the first signs of a recovery here at home and in our main international markets."

And he introduced a carbon tax, equivalent to 15 euros per tonne

All this and more is heading everyone's way, including the carbon taxes. If the Administration cannot reach an agreement with other nations on greenhouse emissions, the EPA is readying rules to limit these gasses:

Quite a lot of people who are refered to as republican spokespeople are not speaking for republicans, any more than say Al gore is speaking for democratic auto workers when he calls the ice engine something along the lines of the worst invention in history.

Most of my kind of conservatives would be very happy if Glen Beck pulled a Tiger Woods and disappeared and if El Rushbo bought a football team and gave up politics.

In the end I am sure most of the denialist crowd are republicans but that may well have more to do with a lack of higher education than anything else.The republicans have cut a defacto deal with the lower white working class and white christian findamentalists who are scared of socialism gun control, and govt hostility towards thier religion as evidenced by the democrats support of socialized medicine, abortion, gun control, etc.

It seems to be rather hard for the average liberal to get it , but the average WORKING CLASS CONSERVATIVE understands that socialized medicine means higher taxes and higher hospital bills for HIM whereas it means a free ride at the hospital for the person down the street with no assets at all.Abortion to a Christian woman is very often one and the same thing as murder.Gun control is the same thing as the Nazis roumding up the Jews. As it happens my second wife was a Jewish girl from NYC who lost two of her grandparents in the holocaust.I sort of doubt that if the Jews had had as many pistols and shotguns as the average redneck conservative country boy that there would have been any holocaust.Hitler might have finished the Jews off but he would have had to do it in full view of his own citizens and the rebellion most likely would have spread and succeeded in an armed country.

Now these understandings may or may not be accurate and may depend on a personal interpretation of the facts but these values are held very strongly indeed, and with excellent reason.

A very close acquaintance of mine recently went to the emergency room at three am with a killer headache and left with a fourteen hundred dollar hospital bill for a cat scan and an exam.Not knowing any better he told the clerk he had insurance but he did not know that his insurance has a FIFTEEN hundred dollar deductible for such services.

Given the fact that he only earns less than ten dollars an hour the hospital would have reduced his bill quite substantially,IF UNINSURED, perhaps by eigthy percent.If he had been destitute , he would have been written off one hundred percent.

He had to pay every dime out of his pocket except for eight dollars that the insurance company found as an overcharge for some obscure reason when the claim as filed and rejected.

Let me repeat my self for the hundredth time-people who lack the necessary technical knowledge to understand complicated arguments such as global warming take thier cues from who ever they trust.

There is a very fat and prosperous and well satisfied super liberal criminal lawyer in my little town who thinks AGW is pure bullshit.So if the subject comes up around him, whoever is impressed with his office and his Escalade and his hot secretary will think the same thing.

The democrats ran against the war in the middle east but now that they are in control I don't see any homecomeing parades for our troops.When it comes time to inflict a little serious pain to do something about cc or peak oil they will behave the same way as the republicans have.

Which is to say they will huff and puff but the brick house of bau can stand a lot of huffin and puffin.

A very close acquaintance of mine recently went to the emergency room at three am with a killer headache and left with a fourteen hundred dollar hospital bill for a cat scan and an exam.Not knowing any better he told the clerk he had insurance but he did not know that his insurance has a FIFTEEN hundred dollar deductible for such services.

That's robbery. This is a scam perpetrated at the expense of both the under and uninsured, where charges are inflated and in turn discounted by insurance - contrary to your impression, this scam applies to the uninsured as well. If the insurance had paid, it would have paid only $400, and the hospital would have been happy.

Your friend should go back to his insurance and demand that they first discount the bill, and then forward the discounted amount to him for payment. If not, the hospital should give him at least a 40% cash discount.

It is not a health care system, it is the health care industry. Its purpose is to make money from people who are not well, in a country where it is accepted that anything is OK as long as you are making money. We all expect to be ripped off, and we are, and we're fine with that - after all, maybe next time we'll be the ones ripping someone off for big bucks (hey, you never know - I could win big soon!). This is called the pursuit of happiness and is the most important part of our Constitution, and therefore it cannot be robbery.

What most US conservatives don't understand is that nearly every conservative in every other industrialized country would in no way be willing to give up their socialized medicine just to preserve their ideological purity.

For US conservatives, ideological purity seems to be everything, much more important than taking care of children, the sick, the poor, the aged...

Yes, decades of yammering by the right have made most people think of anything with "social-" on it as more evil than Satan. Somehow the benefits of public roads, schools, libraries, health, and universities, and social security, medicare, medicaid...don't register as counterexamples to this delusion.

The research, carried out by think tank the New Economics Foundation, says hospital cleaners create £10 of value for every £1 they are paid.

It claims bankers are a drain on the country because of the damage they caused to the global economy. They reportedly destroy £7 of value for every £1 they earn.

Meanwhile, senior advertising executives are said to "create stress". The study says they are responsible for campaigns which create dissatisfaction and misery, and encourage over-consumption. And tax accountants damage the country by devising schemes to cut the amount of money available to the government, the research suggests.

By contrast, child minders and waste recyclers are also doing jobs that create net wealth to the country.

WE didn't bail them out. They bailed themselves out with our money. Again Their rules.

This is why I work so hard to avoid their financial grid. We're back to mostly cash/barter again and it feels good. There was a time that I forsook credit and life was simpler and less expensive. Its good to be back there again. Their rules, their game. I won't play it anymore. Its what's wrong with America. Cash for clunkers was just another credit slavery ploy. This is why I feel bankers and drug dealers are cut from the same cloth. Parasites.

http://www.usecashmovement.org I think it's *probably* ok to post this here, it's the Cash Only Movement, nice non-bloated site about, well, using cash only.

The way to more freedom lies in decreasing your "spending footprint", and what you do spend, being cash, trade, your own production, or barter.

I was discussing with a friend buying milk, a "tub" of coffee, and Q-tips with a friend yesterday. "You can live without milk and coffee etc" he said. I suddenly realized, in the case of Q-tips, I'm better off without 'em anyway, they're lousy. Just a scrap of T-shirt around something works MUCH better. I said this, and said, "OK, I can do without the Q-tips, and milk and coffee are luxuries, but they're luxuries I like so I'll get those." And, I did!

Even at today's prices it's possible to eat CHEAP. Veggies are free around here, meat is cheap (Safeway loss leaders) but it can be free heh heh.

John Wesley Rawles has a thing on his site about saving nickels, I'm kinda wondering if a good move might not be to save all coins with the exception of those new "melting" pennies, as People's Money for the future.

not a bad idea, the "value" of nickel in an old nickel was more than the face value only a little over a year ago. i haven't checked lately, but my hoard of nickels is probably worth about the face value. as far as i know, the "value" of an older copper penny is still more than the face value. i still hoard the pre '82 ones when i find them, but that is a really slow process. i havent checked on the cost of junk silver coins lately either.

I also save 1982 pennies (part of the year the old copper, the rest are copper coated zinc) and have for over a decade.

A pile of boxes of nickels in the corner of the attic under the ... is not a bad storage of value. Always worth face value, and intrinsic value as well.

During Germany's hyperinflation, change for silver marks was given in bronze pfennings (despite the fact that the melt values did not match). Hard money for hard money. A small hand full of pfennigs would buy a loaf of bread.

And during the US War between the States, in the North people were reluctant to give copper pennies out as change for paper dollars (one silver dollar = 2.5 paper dollars) so postage stamps became popular. Paper money for paper money.

IMVHO, nickels should be added to the junk silver collection, and save any 1982 and earlier pennies.

I'm actually getting a bit worried by the degree of "demonisation" of bankers. Not because I think they don't richly deserve it but because it seems like "scapegoating": you take a negative situation and persuade everyone to ramp up their feelings against the scapegoat (who is only partly responsible for the problems), then you "exile" the scapegoat and everyone feels better and loses any interest in doing anything about the original problems. The absolute worst scenario is that we're extremely punitive to the current generation of bankers but don't change things structurally and the excesses start all over again in five or so yearrs.

This is partially why the "demonizers" are going to continue to be frustrated by Obama. They have whipped themselves up in an emotional and ideological fervor that leads them to made demands that are not practical and would not be beneficial. They then feel badly when their rants are ignored.

Banks were one of the causes of the crash, probably one of the major ones. Bank pay and incentives may have been one of the causes behind the crash, but probably a very minor one.

Factors such as the US-China trade imbalance, general easing of credit and liquidity, the failure of ratings agencies, the push go home ownership and all more significant causes that are going to make bank malfeasance inevitable. To the degree that banks were part of the cause, this seems in almost every case (Freddie and Fannie securitizations, capital requirement flaws that encouraged banks, but not hedge funds for example, to hold mortgage debt) there was government complicity.

I am not absolving banks from blame, or saying that they should not be subject to harsh regulatory changes that limit their activities, size, profitability and compensations structures. In fact, I think they should.

At the same, time, I think that those people who are directing all of their wrath at a minority of the problem have skewed priorities, and hence can and should be ignored.

Retail consumer banking is essentially a "utility", and should be run as consumer-owned cooperatives. Such already exist, they are called "credit unions". There is no need for any government action at all, "we the people" simply need to vote with our feet and our pocketbooks, de-fund the for-profit banks, and place all our banking business with our local credit union. Let the for-profit banks wither away and die.

As for commercial banking (service to business customers) and investment banking, we simply need to fiddle with the FDIC formulas so that it becomes impossible for any bank to become "too big to fail". We do this by setting an upper limit not just on the per-depositor insurance amount, but also on the total amount of deposits that are insured per institution. Banks are then required to tell new depositors: "Sorry, we're maxed out. Anything more you place with us is at your own risk." That should do it.

OPEC is out with its new Monthly Oil Market Report for December 2009. (November Data) Production numbers are on page 38 of the report.

I track this month to month to see what OPEC is really doing. I do think Saudi Arabia, Kuwait, UAE, and perhaps Libya are producing below capacity. Iran, Algeria and Qatar may be producing at slightly below capacity but at very close to full capacity. However Angola, Iraq, Nigeria, Ecuador and Venezuela are all producing flat out. These five countries combined produced, in November, more oil than they produced in June of 2008 or any month since! And that includes OPEC's peak month of July 2008.

OPEC is now producing one million barrels per day more than they did in February of this year, the lowest production month since their cuts went into effect.

“What we see with ocean acidification, we are seeing on time scales that are far more rapid than any sort of changes we are seeing on terrestrial systems,” said Green. “People who weren’t able to agree with climate-change science will have an easier time accepting the science on acidification.”

I guess he doesn't understand those people very well. They will claim the oceans were too alkaline before and are now coming into balance. They will say things like, any apparent damage seen to shellfish and coral is really enhanced adaptation, and claiming the more acidified the oceans become the healthier they will be, producing ever more shellfish.

You're not talking about people that are rational, but rather people that believe in things like abiotic oil, the world is cooling, a Universe only 10k years old, with the beauty of ocean acidification soon to be added.

Its really funny what they are trying to do given the recent hard push on oil blew out the old technical trends.

You can't take them through this low they are crowing about how all the trends blew up and oil is now bearish however the recent market moves could also have effectively reset the technicals. In effect a whole new sequence of technical trends are developing. What happens next nobody knows.

Next on a related note I've puzzled for a while why 75 for oil ? Thats a fairly arbitrary price yet its the number the MSM has picked for the fair price for oil.

However when we hit our last high I think I figured out the reason. Given the natural contango in the futures market as the front month climbs past 75 you get futures contracts flipping over 100 across the board. My opinion is the 75 number is purely to keep the 100 dollar contracts off the futures chain.

Its a bit of a funny reason I agree but it seems to be true and don't underestimate the importance of not have 100's on the board.

Needless to say its a precarious situation if the front month goes through the high 80's-90's and contango steepens then we have 100+ oil ripping through the futures right up to the front months. Basically if your pass this 75 threshold its very difficult to prevent the futures market from at least swinging back to the same pattern seen in the last price spike if not worse.

So 75 is actually the highest price that can be held without us flipping over to a futures chain that looks like its predicting expensive oil. Its not only not arbitrary but its also the maximum "low" price.

The potential exists for a violent move in the long dated contracts if it becomes clear that 75 cannot be held. This of course will whip the front month up violently similar to a game of crack the whip.

I think this is the sort of move that could happen and the longer its delayed the harder it will move.

One other possible breakout was steep backwardation on the front month but now I don't think this one is likely. So if we do breakout of this 70-80 range I think the real move will be from the far end of the futures curve back.

Another one thats still possible and this is the doomer scenario is we see effectively simultaneous backwardation on the front and this sharp 100+ contango rip down from the futures. That would be the market move of the century and its not discounted.

Short term i.e over the next week or so I've simply got no idea whats going to happen as I said I don't think anyone does.

However if we are really well supplied with oil then I'd expect the new trend to be distinctly bearish heading back to 60-65 and we may not see prices much over 70 until next summer. If we have enough oil then this price rally should falter and we should continue with a much stronger bearish trend in prices.

If its going to happen then now is when it should happen IMHO. If we don't lock in this bearish trend and a new bullish trend develops then I don't see the chance for another bear market to develop for a while weeks for sure and probably not till spring. So over the short term its now or never for the bears.

I'll add that in my opinion on fundamentals a price range of 60-65 if not lower makes a lot of sense very very little oil thats being produced today was developed with expectations of prices even close to the above so the vast majority of existing production should be readily profitable in that price range if not lower. So the "intrinsic" price in a well supplied market based on fundamentals is significantly lower than 75 and if the market is well supplied then OPEC should have problems defending the 75 price target from declining price pressure not rising.

So again if the bear market is going to form it should happen now this current mini rally should be smashed over the next few weeks and thats being generous.

Hi memmel, I haven't been following futures that much but more dollar/spot prices against the dollar/other trading assets.

Gold has gotten all the attention w/ +$1200/oz. Then again, dollar/stocks, dollar/govt. debt, dollar/just about anything else have been attention getters. S&P 500 up 61% since March lows is astounding under the circumstances.

The US strategy has been to downplay the dollar value and compel dollar holders to trade them cheaply for just about anything else. Why? So they 'come home to Mama' to the only place where they retained some value, the Federal Reserve. The Fed turns around and swap dollars to financiers for worthless securities. Much of the $2 trillion expansion of the Fed balance sheet over base money has simply disappeared.

At that point, oil prices began to retrace along with the dollar. Thanks the the Saudi oil minister Ali al- Naimi, the dollar is now a hard currency.

Funny, it doesn't feel any harder to me!

Fed Chairman Bernanke has been running a massive, worldwide bluff. Let me explain from the beginning; finance creates credit denominated in dollars. Finance lends the credit into existence. The Fed and the Treasury create the dollars themselves. There is a vast amound of dollar- denominated credit, not nearly so many cash dollars. Since last March, finance has been churning out massive amounts of credit. The Fed Chairman has been trying to convince the greater world that all this finance- created credit is really money. The Saudis have just called Mr. Bernanke's bluff. It's not that the Saudi's demand cash, they set the value of cash by controlling the amount of oil a certain amount of cash buys. The Fed Chairman - and by extension the rest of US finance - suggests the dollar isn't worth anything. Ali al- Naimi says otherwise. Naimi wins!! He has oil, Bernake has nothing but red, white and blue boxer shorts.

The consequence of this is profound.

I'm not making this up, just looking at the numbers and watching events unfurl ... in Dubai, Greece, Ireland, Eastern Europe and elsewhere. Everyone knows (now) that oil is valuable. Saudia demonstrates that US cash dollars are equally valuable.

- Lower oil prices in dollars mean the dollar is a hard currency, not backed by useless gold but the world's prime mover. The hard dollar announces that the next deleveraging leg has already begun.

- It suggests that the Fed's strategy - to buy gold through proxies and buoy gold prices relative to the dollar - has failed.

- It means the dollar carry trade, to 'short' the dollar to buy securities in other currencies, is kaput.

- It means China's reign as the world's exporter is done and over with because its currency is pegged to the now- hard dollar.

- Saudia has gained control of OPEC decision making. They have spare capacity, the rest of OPEC doesn't. Saudia can let the other's pump their fields empty. Doing so cannot effect prices meaningfully. Do Americans understand Peak Oil? Heck no! Do the Saudis?

What do you think?

- Saudia has gained control of US monetary policy. Zero percent interest rates and cash production are no longer relevant. What matters more than the real price of credit is the real cost of crude.

- By the effect of protecting the dollar, Saudia's US Treasury reserves are now more valuable. This demonstrates the impotence of Chinese policy makers, who whine while the Saudis act.

- Simultaneously with enhancing the value of US securities, their value is depreciated against cash. The real discount on US debt just went up; call it Saudia's 'Cash Discount'.

Saudia has acted to prevent economic disorder by holding oil prices down. Ironically, they are instead provoking economic disorder as a consequence of creating a bullish dollar. Welcome to the ironic universe! The only ways to break the peg is for Saudia to constrain production and let prices rise (and the dollar collapse), then let the market clear to a new low, as it did earlier this year. The alternative is for the US to conserve to the degree that dollar flows to Saudia are substantially reduced. This would provoke the Saudis to reprice oil against other currencies, breaking the dollar peg. The US situation is identical to that during the early 1930's, where the dollar was pegged to gold. As countries and banks attempted to defend their pegs a widening spiral of default emerged. This intensified until all countries eventually decoupled their currencies from gold. With the dollar pegged to oil, the same decoupling must take place, the US must go 'off oil' or meet the fate it avoided in 1933.

It is likely Bernanke's term as Chairman will end in the beginning of another bear market in equities, gold and other commodities. People suggest that commodities don't matter and while oil is important it's not THAT important. What do you think?

The long term trend that oil has increasing commodity value relative to declining productivity value is reinforced. A finance assets lose value around the world, the relative merits of oil and cash dollars emerge. It will become increasingly difficult to simply burn valuable oil for 'fun'. The matter of return on oil bought becomes essential.

One could, for instance, with a few gallons of it, run an engine no bigger than a large suitcase, which provided power equal to 100 horses, to transport oneself over a hundred miles. Therein of course also lies the shadow side of this engine in a suitcase, built into what we came to label the automobile. 1 horsepower equals 8 "manpowers". It therefore takes 800 men to allow 1 man to move over a distance he could also have walked, just a little faster. No, efficiency would be the last thing that comes to mind when one wishes to describe the automobile.

Its really funny what they are trying to do given the recent hard push on oil blew out the old technical trends.

99% of the world should ignore technical analysis. There is some evidence that it can provide some value in determining market entry points, or in certain specific cases, identifying investment opportunities (momentum, for example).

However, what is thrown around in popular discussion sis no better then reading entrails.

ALGORE: "There is a 75% chance that the entire north polar ice cap, during the summer months, could be completely ice-free within the next five to seven years."

He should try to get a degree in meteorology and perhaps an advanced degree in geology to learn how to research paleoclimatology. We got better forecasts from NOAA. The earth's atmosphere has not risen a degree in 30 years. Millions of years ago there were dinosaurs on the north slope of Alaska. They did not get extincted by global warming.

Take your own advice and get and education before preaching to others. That must be some fine crack you are smoking claiming that there has been no rise in global temperatures in the last 30 years. Even the hillbilly garbage produced by UAH shows an increasing trend in the last 30 years. All other groups using the same satellite radiance data gathered since 1979 find a clear upward trend.

Anyway, who cares what you crackpot denialists think or proclaim. Only idiots would not notice the change in their local climate in the last 30 years. Nobody has any obligation to prove anything to un-educated smartasses such as yourself.

"He should try to get a degree... dinosaurs on the north slope of Alaska. They did not get extincted by global warming."

Let me stop rolling on the floor and laughing out loud before gently pointing out that "extinct" is an adjective, not a verb, so "extincted" is not English (though I think I have heard some second graders use this form). Perhaps you might try gaining a command of the English language beyond the level of a fourth grader before recommending that others get a degree.

The tone of such articles is laughable. As if Russia ever tried to stop Turkmenistan from exporting to China. It already exports to Iran and the bulk of its exports went to Ukraine at a high discount until last year. Instead of jumping up and down with phony joy at Russia's "loss" the journalist clowns who write this trash should exert a bit more of the meager IQ they possess. The only losers are the EU. What is going to fill Nabucco if Central Asian gas goes to China? The only viability for Nabucco is if it is filled with Iranian natural gas. Hence all the hysterics about Iran's legitimate (under the NPT) civilian nuclear program. A regime change is needed to fill Nabucco and stick it to the Russians.

S.A. to change from sweet to sour???? well! that is the most important news on drum beat today. i read, also on drumbeat, that most oil imported to the usa comes from canada. so what does that change really mean? and the mess in mexico. whom shall the mexican gubbermint tax?
the elite wealthy or the squalid poor? and for that matter whom shall the uhmerikan gubbermint tax? the elite wealthy or the squalid poor? YES! the tax rate on unemployment benefits should double easily. that would solve most problems. this reality i read on the oil conundrum...
all about cutting back on consumption. i ask you all...will bernancke cut his consumption? will giethner cut his consumption? will paulison cut his consumption? will summers cut his consumption? will corzine cut his consumption? or will social security pensioners cut their consumption? this is not a trick question. the answer is easy. everyone else except the corrupt elite class will cut their consumption. i bought a can of salted cashews yesterday. and a canister of raisins. has anyone noted that the price of raisins has increased dramatically? no doubt because gold man sacks is manipulating raisin futures. but it's all good as some one or another famous once sed. this person whose name i cant remember also sed that driving electric cars wont change anything.
so the oceans are dying? soylent green anyone? EAT THE RICH!
90% of the snow i had last week melted off my solar panels. only 10% is still covered. one strip on the bottom array. when the sun comes out tomorrow that 10% blockage will reduce output by 90%. i aint going on the roof to clean those panels off. will burn wood this weekend in my "cat" stove. it aint romantic. it's rather labor intensive. lots of hassles. possible dangers. but i can raise the temp in by 50%.

I'm trying to understand why you keep harping on your Solar Panels and how you won't bother to clear them off and get the power they can produce.

It SOUNDS like you are trying to ridicule the technology, but of course your misplaced satisfaction at refusing to find a way to get any power from them comes off more as an adolescent urge to poke your finger in someone's eye. Anyone's.. You trying to prove that getting a nice 3kw installation was a waste of money?

Well, you sure showed em! Yesiree!

Anyone can take a C-note and light it on fire.. but what are they actually proving?

when the sun comes out tomorrow that 10% blockage will reduce output by 90%.

Well, that depends on which 10% is covered. Groups of panels are wired in series, shade one of them and it determines the current limit for the whole string. But at 3KW, and 150 to 175 watt panels being typical you probably have two strings. Shade one panel and you lose one string 50%.

So how hard would it be to nudge that snow along. Panels in full sunlight ought to get pretty warm, and snow on 33 degree glass is very slippery. Perhaps all you need to do is remove a block of snow blocking the whole mass from slipping off.

My problem is good old fashioned grey California weather. Lots of sunshine most of the year, but December and January wall to wall grey is the depressing norm....

Whether this is the one that is able to pull it off officially (which would indeed be BIG!), wake up people. COP>1 tech is a reality. "Free energy" is no secret to the compartmentalized projects within the military industrial complex. I used to be a devoted follower of the Oil Drum until I was ridiculed for suggesting that it is possible to harness the quantum vacuum field. Of course, free energy would change everything - including making the monetary system as we know it obsolete. So it's really a question of power. There is the elite, and then there is the Elite. This is the real problem.

All our problems are solved.
Thats if our problems were about using the energy of a battery to recharge said battery, oh and create trace heat.

There are claiming the function of spinning as one degree of gain but only enough effort drawn off to charge its self. This is significant but hardly a game changer.

Is it possible to increase efficiency enough to charge two batteries?

Is it scaleable to a degree that is useful to humanity?

Can we use it to electrocute enough people to address the population issue?

We shall see.

EDIT: after looking closely this is not even the original concept. its a total redesign and is now just a magnet motor nothing more. totally reliant on proximity to the field to repel and attract. the original "orbited" outside the field yet having an effect on the field without "switching" the magnet into repel or attract pulse.

Well they have a very snazzy ad, but that thing is utter BS. If all they need is an energy reservoir, why aren't they using a CAPACITOR? Instead, they're running the thing off of an industrial type battery, note the "10,000" on the side, I'm thinking industrial alkaline or even a lithium cell - this is important because these batteries are used in crucial equipment and well, they just last a heck of a long time, longer than the ones you get at the supermarket etc.

A real kick is that their scenario calls for importing natural gas from the U.S.! Who among us believes that will ever happen?

But what will the tar sands producers do when they run out of natural gas if they don't import it from the US. Well, they could burn their product to produce heat. But that would cut into their production.

Sarah Palin and the rest of the Alaskans are DESPERATE to get that NG from Prudhoe Bay out of the ground as the oil production from Prudhoe Bay drops towards zero and their petrostate runs out of petrodollars.

The distance from Prudhoe Bay to the tar sands is closer than any other major market, and existing pipelines to northern Alberta could be reversed and take some fraction of Alaskan NG further south. My guess is that relatively small amounts would go to the USA (lower 48).

The Arab states of the Gulf region have agreed to launch a single currency modelled on the euro, hoping to blaze a trail towards a pan-Arab monetary union swelling to the ancient borders of the Ummayad Caliphate.
“The Gulf monetary union pact has come into effect,” said Kuwait’s finance minister, Mustafa al-Shamali, speaking at a Gulf Co-operation Council (GCC) summit in Kuwait.

The move will give the hyper-rich club of oil exporters a petro-currency of their own, greatly increasing their influence in the global exchange and capital markets and potentially displacing the US dollar as the pricing currency for oil contracts. Between them they amount to regional superpower with a GDP of $1.2 trillion (£739bn), some 40pc of the world’s proven oil reserves, and financial clout equal to that of China.
Saudi Arabia, Kuwait, Bahrain, and Qatar are to launch the first phase next year, creating a Gulf Monetary Council that will evolve quickly into a full-fledged central bank.

All of a sudden Ambrose thinks that the European Union and the Euro are wonderfully well thought-out and that this "dinar" is doomed. He said the same thing about the euro just yesterday, of course.

Currency unions are created to support consumption. They're a hedge against rising input prices. A currency union of the Gulf can't effect real prices since any gains in the currency trade will be subtracted from what they earn for their crude.

I suppose they believe they can gain seigniourage but that (form of taxation) is also subtracted from what they are actually producing.

Funny, the countries involved might believe their new currency will be a proxy for their oil. Instead, it will likely be the proxy for their defaults, if the dinar actually circulates.

Interesting commentary from Zero Hedge on the implications of the Exxon/XTO deal for the Arthur Berman thesis about the unattractiveness of shale gas:

The flip side, and a special note to shale gas industry nemesis Arthur Berman--you have been trumped and made to look foolish, Mr. Berman. Now your analysis feels a bit like peeing in the wind, doesn't it? The worlds greatest energy company and investor has just made a big bet on natural gas, more specifically shale gas. They know a lot more than you do, and they are putting their money where their research suggests the opportunity will be.

Zero Hedge is so wrong it's not funny. You can check my post on today's Drum Beat for details. ExxonMobil did not make a bet on the future of shale gas. They bought a company with a good cash flow but deeply in debt ($10 billion) which had its financial back broken by its efforts in the resource plays. XTO stock had fallen almost 50% from its high during the SG hype (go ask those investors how much they like he SG plays). Very little of XTO's undeveloped acreage in the SG plays will ever be drilled by XOM IMHO. Most of that acreage will expire in the next three years or so. Given that all the SG players who know more about the economics then anyone have shut down most of their SG drilling programs tells you all you need to know about the potential for XOM to shove a bunch of drill rigs into the plays anytime soon.

It's not difficult to understand if you just look at the basics. And if NG stay low for much longer you'll see more acquisitions like this. It has always happened this way and always will: when there's a bust in the oil patch the strong buy up the weak at a big discount. ExxonMobil did not pay a 25% premium for XTO. They got a 35% discount from the high that resulted from folks like Zero Hedge hyping the play. A well that cost $6/mcf to drill but you sell the NG for $3.50/mcf is not a good investment. But when you buy that well for $1.50/mcf from the company that drilled it then you can make money from that SG well even when you have the low NG prices we see today. And that's exactly what XOM did.

Got to say I respectfully disagree with most of what you say here Rockman. First, on the issue of what Exxon is buying, it's awfully hard to make the case that they are not buying into shale gas since that is most of the assets that XTO has. And it also tough to make the case that they're getting it dirt cheap. It's true that their buying XTO for a good bit less than what its stock sold for in July 2008 (when NG prices were much higher and shale gas mania was also at a peak). But they're also paying nearly double what XTO was selling for in November 2008. And you keep making the point that they're paying with stock. But do you know how much cash Exxon has paid for that stock their using to make the acquisition? Exxon has been continuously buying in their stock for many years. Much of that stock was purchased at much higher prices than the current $68 per share. In fact, over the last few years, virtually all of their purchases have been at higher prices -- as high as $94 per share. So they paid through the nose-- in cash-- for the currency they are using to buy XTO.

I also disagree on the matter of rigs. Its precisely the shale gas rigs that are mostly still working. It's the vertical rigs on conventional plays that are largely being laid down. Now it's true that the rig count in the Barnett has fallen sharply; but that is because many of these rigs are being moved to the other newer shale plays, including the Haynesville, Marcellus and Eagle Ford. Here's a quote from Ethan Bellamy in a recent issue of the Wall Street Transcript that addresses this issue:

According to Ethan Bellamy, senior vice president of natural resources within the equity research department of Wunderlich Securities, the current rig count in the United States sits at 1,078, down 914 from the same time last year. However, fewer active rigs has not translated into less supply, as the gas market continues to be fed by the prolific and low-cost shale plays.

"It's very geography specific, places where finding and development costs are very low are being drilled. And then secondarily, I would say that the places where operators have leases that will expire unless they hold them by production, those are being drilled," Bellamy said. "For both of these trends, we are talking specifically about plays such as the Marcellus Shale in Pennsylvania, the Haynesville Shale in Texas and Louisiana, Fayetteville Shale in Arkansas and Eagle Ford Shale in South Texas."

Still not convinced? Check out the Baker Hughes rig count data. I just did and it is pretty clear that it is horizontal unconventional rigs that have fallen the least. Here's another quote from the Wall Street Journal referencing the BH rig data:

The number of gas rigs in use peaked at 1,606 in September 2008. Producers have curbed natural-gas drilling sharply over the past several months in response to falling prices, but the rig count has stabilized in recent weeks as wintry weather boosts the demand for natural gas for heating.

The most substantial decline in rig counts has occurred in vertical drilling rigs, which are used to drill straight down into conventional oil and gas reservoirs. The number of vertical drilling rigs has fallen by about 60% over the last year. Horizontal rigs have dropped by a lesser amount. Horizontal drilling has declined by 26% over the year as producers have continued to exploit prolific gas fields known as shales.

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“I'd put my money on solar energy… I hope we don't have to wait til oil and coal run out before we tackle that.”

—Thomas Edison, in conversation with Henry Ford and Harvey Firestone, March 1931